{"id":29281,"date":"2012-04-24T20:03:37","date_gmt":"2012-04-25T00:03:37","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/04\/12-compulsory-super-get-ready-for-the-governments-next-tax-grab\/"},"modified":"2012-04-24T20:03:37","modified_gmt":"2012-04-25T00:03:37","slug":"12-compulsory-super-get-ready-for-the-governments-next-tax-grab","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/04\/24\/12-compulsory-super-get-ready-for-the-governments-next-tax-grab\/","title":{"rendered":"12% Compulsory Super \u2013 Get Ready for the Government\u2019s Next Tax Grab"},"content":{"rendered":"

By MoneyMorning.com.au<\/a><\/strong><\/p>\n

The rule of unintended consequences is that something unforeseen happens as a result of doing something else.<\/p>\n

A good example is the housing insulation scheme.\u00a0 The idea behind the policy was that it would serve a dual purpose.\u00a0 It would stimulate the economy and help the environment.<\/p>\n

A political one-two if ever there was one.<\/p>\n

<\/span><\/p>\n

But, in order to profit from the huge taxpayer-funded handout, companies had to get in quick.\u00a0 The handout wouldn\u2019t last forever.\u00a0 If an insulation company took too long to get its act together, other companies would act, and so it could miss the government cash.<\/p>\n

The unintended consequence was that companies cut corners.\u00a0 Such as by not providing suitable training.\u00a0 This even led to some under-qualified installers dying.\u00a0 And when the government axed the insulation scheme, it left companies with a whole bunch of excess stock.<\/p>\n

Well, it seems the government has knocked-in another own goal.\u00a0 This time with changes to compulsory<\/strong> superannuation<\/strong>\u2026<\/p>\n

Superannuation\u00a0Isn’t\u00a0\u201cMagic Money\u201d\u2026<\/span><\/h3>\n

You\u2019re probably aware that compulsory superannuation<\/a> will rise in stages.\u00a0 From 9% of your salary today, to 12%<\/strong> by 2020.<\/p>\n

Most people think super money is magic money.\u00a0 That it just appears from nowhere.\u00a0 But most people don\u2019t realise that a company allocates super money from its labour force budget.<\/p>\n

So, if the government increases compulsory super, the company has to make a choice.\u00a0 Does it reduce staff wages?\u00a0 Cut staff numbers?\u00a0 Or cut other costs \u2013 buy lower quality components, move to a premises with lower rent, and so on.<\/p>\n

The easiest choice is to either cut wages or at the very least not increase wages by as much as they otherwise would.\u00a0 This creates an unintended consequence for the government and its budget plans\u2026<\/p>\n

You see, the problem is the impact it has on government tax revenue.\u00a0 Simply put, if you earn $80,000 and your boss gives you a $2,400 (3%) pay rise, the government will swipe $888 of that amount as tax.<\/p>\n

But, if the government forces employers to pay that 3% pay rise as a super contribution, the tax taken by the government is only $360.<\/p>\n

That\u2019s because the government levies tax on super contributions at 15%.\u00a0 Compared to the 37% rate for a wage earner on $80,000.<\/p>\n

Of course, the above is an example.\u00a0 The rise from 9% to 12% won\u2019t happen in one go.\u00a0 It will rise over the next seven years.\u00a0 But the point remains the same.<\/p>\n

By forcing bosses to pay more super to workers rather than giving them a pay rise, the government forgoes 15 cents in the dollar for every dollar that goes to superannuation rather than to the workers\u2019 pocket.<\/p>\n

As you can guess, that\u2019s fine by us.<\/span><\/em> We\u2019d rather you<\/em> get the money than the government (in fact, we say you should get to keep all<\/em> your income and the government get nothing).<\/p>\n

But it hasn\u2019t taken the government long to realise it has shot itself in the foot.<\/p>\n

\u2026Superannuation is Captive Money<\/span><\/h3>\n

This news came out late last week in the Fairfax press:<\/p>\n

\u201cA senior [government] source confirmed yesterday reports that the billions in tax breaks that apply to superannuation contributions were squarely in the sights of the government\u2019s razor gang as it strives to return the budget from a $40 billion-plus deficit to a surplus.\u201d<\/em><\/p>\n

The irony appears to be completely lost on the government.\u00a0 It passes a law to force people to save more for retirement\u2026 but then slugs them with a tax bill.<\/p>\n

But then, maybe it\u2019s not an unintended consequence.\u00a0 Maybe it\u2019s part of the government\u2019s grand plan to raise taxes.\u00a0 Think about it this way\u2026<\/p>\n

There are far fewer ways to claim tax deductions within a super fund than outside.\u00a0 And<\/em> the money is captive.\u00a0 You can\u2019t touch it.<\/p>\n

But maybe we give politicians too much credit for having brains.<\/p>\n

The bottom line is, the attack continues by governments here and overseas on privately held wealth.\u00a0 The question is, are you prepared to do anything about it?<\/p>\n

We\u2019re doing our part by bringing this to your attention.\u00a0 And we even give you advice on ways to grow and protect your wealth.<\/p>\n

The next step is for you to do something\u2026 to grow and protect your wealth.\u00a0 If you haven\u2019t already started, what are you waiting for?<\/p>\n

Cheers.
\nKris<\/strong><\/p>\n

The Conference of the Year “After America” DVD<\/a><\/p>\n

Why You MUST Speculate<\/a><\/p>\n

Disruptive Technology Stocks For Smart Small-Cap Investors<\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\n12% Compulsory Super \u2013 Get Ready for the Government\u2019s Next Tax Grab <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au The rule of unintended consequences is that something unforeseen happens as a result of doing something else. A good example is the housing insulation scheme.\u00a0 The idea behind the policy was that it would serve a dual purpose.\u00a0 It would stimulate the economy and help the environment. A political one-two if ever there … <\/p>\n

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